Durable-goods orders up record 12.8 percent in October

Published: Thursday, November 29, 2001

JEANNINE AVERSAAssociated Press Writer

WASHINGTON (AP)  Orders to U.S. factories for costly manufactured goods soared a record 12.8 percent in October, reflecting stronger demand for a wide variety of big-ticket items, from cars to computers.

The rebound in durable goods  items expected to last at least three years  came after new orders dropped by 9.2 percent in September, the Commerce Department reported Thursday.

The 12.8 percent increase was the largest since the government began keeping records based on the current classification system in March 1992. It also marked the first increase in orders for durable goods since May.

The report offers a rare bright spot for the nation's battered manufacturing sector, which has been hardest hit by the sinking economy. To cope with sagging demand, factories have sharply cut production and laid off workers.

Separately, the Labor Department reported that new claims for unemployment benefits surged last week by 54,000 to 488,000 as companies laid off workers in response to the shrinking economy.

In the durable-goods report, new orders for transportation products posted the largest increase in October, rising by 38.8 percent, after falling by 16.2 percent the month before.

After falling sharply in September, orders for airplanes jumped by 233.2 percent and orders for cars rose 10.6 percent in October.

Excluding the volatile transportation category, which can swing widely from month to month, new orders grew by 3.4 percent in October, the largest increase since May 2000.

Orders for computers and electronic products, which fell by 8.6 percent in September, went up by 10.3 percent in October, also the largest increase since May 2000.

Orders for electrical equipment and appliances increased by 3.8 percent, after declining by 10.5 percent in September.

Shipments, a good barometer of current demand, rose 3.2 percent in October, after falling by 6 percent in September. It was the first increase in shipments in five months.

There were some weak spots in the report. Orders for industrial machinery declined by 0.3 percent in October, following a 7.5 percent drop in September. Orders for semiconductors dropped by 17.2 percent, following a 16.9 percent gain. Orders for primary metals, including steel, declined by 2.6 percent, on top of a 5.7 percent decrease.

The stronger-than-expected durable-goods report followed other statistics that painted a gloomy economic picture for the same month.

In October, industrial production plunged, consumer confidence sank to a 7 1/2-year low and the nation's unemployment rate soared to 5.4 percent, reflecting the damage inflicted not only by the shrinking economy but also by the fallout from the Sept. 11 terror attacks.

The National Bureau of Economic Research on Monday officially declared that the economy has been in recession since March, the first downturn in a decade.

Many economists believe Federal Reserve policy-makers will cut interest rates for an 11th time this year at their next meeting on Dec. 11 in a continued effort to prevent the economy from sinking deeper into recession.